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August 19, 2009

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Home » Business » Economy

Solid data offset export drop

THE growth in consumption and investment in Shanghai accelerated in July - good news that countered the continued drop in exports, Shanghai Statistics Bureau said yesterday.

Shanghai's retail sales increased 14.3 percent from a year earlier to 43.1 billion yuan (US$6.3 billion) last month, compared with a rise of 14.1 percent in June.

The fixed-asset investment in the first seven months expanded 14.4 percent on an annual basis to 273.8 billion yuan, up from the growth of 9.6 percent in the first half. Investment on infrastructure construction jumped 32.1 percent from a year earlier to 107 billion yuan during the period, boosted by demand from the 2010 World Expo in Shanghai and the government stimulus package, the bureau said.

Meanwhile, Shanghai's Consumer Price Index fell 1.9 percent from a year earlier last month, dropping further from the decrease of 1.5 percent in June and keeping the threat of inflation at bay.

"The city's overall economic conditions have been improving thanks to government efforts to boost local demand, but the continued fall in exports raises difficulty for Shanghai to meet the target of a 9 percent growth for this year," said Li Maoyu, an analyst at Changjiang Securities Co.

The city's exports, the sector hardest hit by the global economic downturn, slumped 24.1 percent year on year last month to US$12.2 billion, widening from a 14.8 percent drop in June, Shanghai Customs said last Friday.

The weak global economic conditions also took their toll on foreign direct investments in the city, which plunged 34.4 percent in July from a year earlier to US$1 billion. In June, the FDI fell 29.9 percent year on year.

"What needs attention is that the city's investments are mainly government-driven and focused on infrastructure construction," Li said. "If the investments are initiated by private companies and are spent in developing business, it would be more sustainable because it is a sign of restored business confidence."


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